Partnerships - an introductionPartnerships are a combination of more than one trader, and are similar to sole traders except they are owned and operated by more than one person. The partnership would normally have a partnership agreement, which is a legal contract between the business partners about how the business will conduct it’s day to day activities, and also how the partners will deal with any disputes should they arise in the future. If a partnership agreement is not prepared, and no agreement is implied, it is presumed that the terms within the Partnership Act 1890 apply.
Like a sole trade, a partnership is not required to register anywhere except with HM Revenue & Customs, so the start up costs are minimal. They have the same naming situation as sole traders as well, so a typical partnership name may be:
Mrs Smith & Mr Jones trading as Yummy Cake Shop
Partnerships have the notion of joint and several liability, as the partnership is deemed to simply be an extension of the individual partners from a legal perspective. As such, there is a risk to all partners in the partnership should the business incur debt. Partnerships are often used for larger businesses than sole trades, and traditionally were used for professional businesses such as architects, doctors surgeries, accountants and solicitors.